Chapter 14 Sec 1: The Nation's Sick Economy

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Transcript of Chapter 14 Sec 1: The Nation's Sick Economy

Chapter 14 Section 1- The Nation's Sick Economy The Great Depression Begins How does America go from this.... To this in just a couple of months.... Main Idea: As the prosperity of the 1920s ended, severe economic problems gripped the nation. Why it Matters Now:The Great Depression has had lasting effects onhow Americans view themselves and their government. Key Terms & Names:price support credit Alfred E. Smith Dow Jones Industrial Averagespeculation buying on margin Black Tuesday Great Depression Hawley-Smoot Tariff Act Economic Troubles on the Horizon The crash of 1929, and the depression that followed, dealt a crushing blow to the hopes and dreams of millions of Americans. The high-flying prosperity of the 1920s was over; hard times had begun. Big Problems in America: Huge gap between rich and poorImportant industries struggledFarmers grew more crops and raised more livestock than they could sell at a profitBuying of credit during the Roaring 20s caused steady increase in debts Production expanded much faster than workers wages Economic Background Industries in Trouble: Key basic industries in trouble; railroads, textiles, and steel had barely made a profitMining and lumbering were no longer in high demand. Automobiles, construction and consumer goods- weakened. Vocab: Credit- an arrangement in which consumers agreed to buy now and pay later for purchases. Farmers Need a Lift: 1919-1921 farm income went from 10 billion to just over 4 billion.Federal Price-supports- for key products such as wheat, corn, cotton, and tobacco.Government would buy surplus crops at guaranteed prices and sell them on the world market.What are some problems with this idea? Uneven Distribution of Income During the 1920s, the rich got richer and the poor got poorer.The income of the wealthiest 1% of the population rose by 75%More than 70% of the nation's families earned less than $2,500 per yearThis meant that 70% of the population couldn't afford to buy the manufactured goods that companies were producing. These problems will continue to snowball until October of 1929 when the bottom falls out of our economy dragging American into disaster.